Cango(CANG) - 2024 Q1 - Quarterly Report

Q1 2024 Financial and Operational Highlights Cango reported lower Q1 2024 revenues but higher operating and net income, improved liquidity, and slightly increased delinquency ratios Q1 2024 Key Financial Metrics (vs. Q1 2023) | Metric | Q1 2024 (RMB) | Q1 2023 (RMB) | Change | | :--- | :--- | :--- | :--- | | Total Revenues | 64.4 million | 542.6 million | -88.1% | | Income from Operations | 74.2 million | 51.8 million | +43.1% | | Net Income | 90.0 million | 78.8 million | +14.3% | Financing Transaction Overdue Ratios | Metric | As of Mar 31, 2024 (%) | As of Dec 31, 2023 (%) | | :--- | :--- | :--- | | M1+ Overdue Ratio | 2.87% | 2.66% | | M3+ Overdue Ratio | 1.51% | 1.37% | - The total outstanding balance of financing transactions facilitated by the company was RMB 7.6 billion (US$1.1 billion) as of March 31, 2024[2] - Liquidity improved significantly, with cash, cash equivalents, short-term investments, and restricted cash increasing by RMB 152.6 million compared to the end of 2023. This was primarily due to positive operating cash flow from reduced working capital in car trading and collections[3] Management Commentary Management emphasized strategic shifts in new and used car businesses, leading to improved profitability and sustained positive operating cash flow - CEO Jiayuan Lin stated the company proactively reduced its self-operated new car business, streamlined purchasing, and optimized inventory to mitigate risks from declining new car prices[4] - The company completed the integration of 'Cango U-car' to enhance vehicle supply and dealer services, and launched a cross-border information platform for used car transactions in March[4][5] - CFO Yongyi Zhang confirmed that strategic efforts to scale back new car inventory and improve efficiency resulted in a profit for Q1 2024 and a third consecutive quarter of positive operating cash flow[6] Detailed Financial Results Q1 2024 results show sharp revenue decline from reduced auto trading, but profitability improved significantly due to cost cuts and credit loss recoveries Revenues Q1 2024 Revenue Breakdown (vs. Q1 2023) | Revenue Source | Q1 2024 (RMB) | Q1 2023 (RMB) | | :--- | :--- | :--- | | Total Revenues | 64.4 million | 542.6 million | | Automobile trading income | 3.4 million | 429.8 million | | Guarantee income | 30.3 million | 64.1 million | | After-market services income | 11.6 million | 16.7 million | | Loan facilitation income | 13.8 million | 2.3 million | Operating Cost and Expenses Q1 2024 Operating Expenses (vs. Q1 2023) | Expense Item | Q1 2024 (RMB) | Q1 2023 (RMB) | | :--- | :--- | :--- | | Cost of Revenue | 29.1 million | 480.5 million | | Sales and Marketing | 3.5 million | 12.5 million | | General and Administrative | 37.9 million | 39.8 million | | Research and Development | 1.1 million | 8.1 million | - The company recorded a net gain on contingent risk assurance liabilities of RMB 15.0 million, compared to a gain of RMB 1.6 million in Q1 2023[9] - A net recovery on provision for credit losses of RMB 66.3 million was recognized, primarily due to collections of financing receivables[9] Profitability Q1 2024 Profitability Metrics (vs. Q1 2023) | Metric | Q1 2024 (RMB) | Q1 2023 (RMB) | | :--- | :--- | :--- | | Income from Operations | 74.2 million | 51.8 million | | Net Income | 90.0 million | 78.8 million | | Non-GAAP Adjusted Net Income | 95.7 million | 92.8 million | Earnings Per ADS Q1 2024 Earnings Per ADS | Metric | Basic (RMB) | Diluted (RMB) | | :--- | :--- | :--- | | Net Income per ADS | 0.85 | 0.80 | | Non-GAAP Adjusted Net Income per ADS | 0.91 | 0.85 | Balance Sheet Key Balance Sheet Items (as of Mar 31, 2024) | Item | Mar 31, 2024 (RMB) | Dec 31, 2023 (RMB) | | :--- | :--- | :--- | | Cash and cash equivalents | 1.2 billion | 1.0 billion | | Short-term investments | 2.3 billion | 635.1 million | Corporate Developments and Outlook Cango projects Q2 2024 revenues between RMB 35 million and RMB 45 million, and has repurchased approximately US$579,000 in ADSs under its new program - For the second quarter of 2024, the Company expects total revenues to be between RMB 35 million and RMB 45 million[13] - Under the share repurchase program announced on April 23, 2024, the company repurchased 360,858 ADSs for approximately US$578,975.4 up to May 31, 2024[14] Consolidated Financial Statements (Unaudited) Unaudited Q1 2024 statements detail Cango's financial position and performance, highlighting asset and liability levels, and net income despite revenue shifts Consolidated Balance Sheet Balance Sheet Summary (as of March 31, 2024) | Category | Amount (RMB) | | :--- | :--- | | Total Current Assets | 3.91 billion | | Cash and cash equivalents | 1.16 billion | | Short-term investments | 2.32 billion | | Total Assets | 4.58 billion | | Total Current Liabilities | 670.2 million | | Total Liabilities | 723.7 million | | Total Shareholders' Equity | 3.86 billion | Statements of Comprehensive Income Income Statement Summary (for Three Months Ended March 31, 2024) | Line Item | Amount (RMB) | | :--- | :--- | | Total Revenues | 64.4 million | | Total operation cost and expense | (9.7) million | | Income from operations | 74.2 million | | Net income before income taxes | 102.1 million | | Net income | 90.0 million | Appendix This section provides supplementary information, including definitions for overdue ratios, Non-GAAP financial measures, and reconciliation of adjusted net income Use of Non-GAAP Financial Measures & Reconciliation - The company uses Non-GAAP adjusted net income, which excludes share-based compensation expenses, to evaluate operating performance[19] Reconciliation of GAAP to Non-GAAP Net Income (Q1 2024) | Line Item | Amount (RMB) | | :--- | :--- | | Net income (GAAP) | 90.0 million | | Add: Share-based compensation expenses | 5.7 million | | Non-GAAP adjusted net income | 95.7 million | Definition of Overdue Ratios - M1+ overdue ratio is defined as the exposure at risk for payments 30-179 days past due, divided by the total outstanding exposure at risk (excluding amounts 180+ days past due)[18] - M3+ overdue ratio is defined as the exposure at risk for payments 90-179 days past due, divided by the total outstanding exposure at risk (excluding amounts 180+ days past due)[18]